A beekeeping business in Bay of Plenty recently found themselves in hot water after they dismissed an employee six weeks into the job, thinking they were covered by the 90-day trial law from a claim of unjustified dismissal.
Although the worker’s performance was objectively poor, because the employment contract he signed was a template without his name, pay-rate, or any mention of a trial period; he was entitled to full dismissal proceedings and the 90-day law didn’t apply.
The courts have said that because the law is very clearly in favour of the employer, any cases on it will be judged using a narrow scope – so you need to meet all your obligations to be properly covered by the law.
The trial period isn’t automatic
Although up to two-thirds of employees start a new job under a 90-day trial, it isn’t automatically imposed when hiring.
- The existence of a trial period,
- The duration of that trial period,
- And clause stating that the employer may dismiss the employee during the period and the employee is not entitled to bring a personal grievance case or other legal proceedings in relation to that dismissal
All must be included in the contract.
While 90 days is the longest period of time a trial can last, an employer can choose to set a shorter period – or not have a trial period at all.
Making sure the clause is valid
It’s all very well to have a trial-period clause in an employment contract, but there are a number of factors which need to be taken care of to ensure the clause is valid.
- The employment contract must be signed and returned before the employee starts work.
- The employee must have had adequate time to read the contract, and get third-party advice. So delivering the contract a day before the employee’s start date and requiring it to be signed by the next morning would likely invalidate the trial period clause.
- If you have made any promises around training or hours in the contract, but haven’t met those promises, the trial period clause can be rendered invalid.
Also, trial periods can only be imposed on new employees. So if your company has paid the person for work before – including part-time work – they don’t come under the 90-day trial law. This is true even if the work was a long time ago, or if the company has been bought out, merged with another, or changed its name.
Dismissing an employee using the 90-day trial law
So you’ve made a poor hire, and you want to dismiss them during their 90-day trial. To make sure you don’t leave yourself open to any problems, make sure you have everything in order.
- The dismissal needs to be given in writing, stating the date of dismissal and length of notice to be served by the employee.
- Don’t offer to pay in lieu of notice – the employee should work out their notice. Understandably that might not be ideal for both parties, so coming to an arrangement where the notice period is served on “garden leave” and the employee stays at home rather than working is acceptable, but both parties need to agree. The employee should officially remain an employee for the length of their notice period.
- Get the date right. If you’re nearing the end of the 90-day period, double-check you’re still within it. On day 91 the trial is over and you could be at risk of unjustified dismissal.
- While you don’t have to give a reason for the dismissal in writing, if the employee asks why they’re being dismissed when they receive the notice, you have to give a reason.
Good Faith
The concept of “Good Faith” is critical to the trial process and dismissing someone under the 90-day trial law. A dismissal shouldn’t come as a complete surprise to the employee – while no formal procedures need to have been started, you should have spoken to the employee about their performance issues and given them a chance to improve. In regards to protecting yourself, make sure you record that a discussion has taken place and the issues you want improved.
When it comes to providing a reason why the employee is being dismissed, it’s useful to have these earlier conversations to refer to. However, any true reason for dismissal is acceptable, even if it is just that the employee didn’t fit the job well.
What the law doesn’t cover
An employee can still bring cases of discrimination to court, including potential discrimination in treatment between workers who were on a trial period and those who weren’t. This is one reason why it’s good to communicate the reasons behind a dismissal – you don’t have to, but giving no reason might lead an employee to decide they have been dismissed because of their sex, race or religion.
The trial law also doesn’t prevent harassment claims, or claims of “unjustified disadvantage.”
Getting a lawyer on board if you want to use the 90-day trial law is always a good idea, even if you’re sure you’ve done everything right, some advice could prevent making a costly mistake.